5 Million Archives Page 2 Of 2 – Refinance – Mortgage Refinancing Rates And Information

Loan Modification Mogul Sued For Duping Desperate Homeowners

August 14th, 2009 No comments

Loan modifications and mortgage refinancing are the hot subject of the moment in the financial world. This is no surprise when there are around 5 million homeowners facing foreclosure with or without the government’s aid and 9 million without it. This “need” has opened a practically brand new market for financial consultants looking for a niche to work in. In a matter of months a new industry was born providing help and advice to save our homes and consolidate our debts while reducing our monthly payments.

Unfortunately some companies and individuals have taken advantage of this new industry to target desperate home owners that in their need to lower their monthly expenses are vulnerable to scams.

The government is trying its best to reduce the increase in foreclosures. That is a good thing because according to the Center for Responsible Living a new foreclosure is filed every 13 seconds. Of course the government doesn’t appreciate it when private companies and consultants pull down the modest advances they are making by duping home owners into fraudulent contracts and outright scams.

The latest and most scandalous case occurred yesterday when Attorney General Andrew M. Cuomo announced that his office had filed a lawsuit against American Modification Agency, Inc. (Amerimod) one the biggest foreclosure rescue companies in the country, and its owner Salvatore Pane, Jr.

The lawsuit accuses Amerimod and its owner of deception, false advertising and deception of homeowners in risk of foreclosure. The investigation into Amerimod disclosed that while the company claimed to modify the mortgages of desperate homeowners close to foreclosure did not only fail to fulfill its promises but actually added to their financial woes by throwing them deeper into debt. Amerimod would routinely charge up-front fees for services they had not carried out. They exaggerated their loan modification success rate and underestimated the time required to modify the loan.

The lawsuit also accuses Amerimod of failing to include the legally required disclosures in the customer contracts. What is even worse is that the company regularly provided terrible financial advice to its customers, like suggesting they stop making mortgage payments to their lender. They would also target Spanish speakers with Spanish speaking salespeople but once it came to contract signing they would not provide Spanish contracts.

The lawsuit hopes to close down the loan modification company and compensate Amerimod customers that were charged illegal up-front fees and fell for their hollow promises.

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Obama Mortgage Plan, How People Are Lying For Aid

August 13th, 2009 No comments

Mortgage Aid is a nightmare to administer. Well, any kind of aid is hard to administer well and fairly. I have lived some years in Nicaragua a country that pretty much subsists on financial aid from the United States, the European Union and Japan. These countries try to provide Aid in a fair and effective way I’m sure, but this is hardly the case. In most situations the poor never saw any benefits and if they did it was only a portion of the original amount while the powers that be or savvy businessmen take the cream of the aid.

Mortgage Aid in the United States or any other developed country is hardly easier, which is why the Obama Mortgage plan is being played with for the profit of some savvy homeowners that are willing to lie.

How does this work?
The current Mortgage Plan provides help for homeowners that are in “imminent default” they will get help from the government that will rework their mortgage by lowering interest rates and lengthening the loan or even lowering the principal of the mortgage in order to reduce the monthly mortgage payments to under a third of the homeowner’s income.

This idea is great. It helps homeowners that spent too much on their home and helps them avoid foreclosure. Estimates place the number of Americans that will lose their homes at 5 million in the next three years even with government help.
The problem is that borrowers are lying on their income and expenses in order to get a better deal just as they lied to get a better house. It is much easier to make yourself look poor than rich.

The Obama administration aims to help 4 million borrowers, one in fifteen Americans with a mortgage, an amazing goal, through mortgage modifications. Up to now they have helped around 200,000 homeowners with trial modifications. The BIG question is how many of these homeowners really need the help and which are just playing the system.

The thing is that the lying is very easy for many Americans as it might not even seem dishonest to many. Millions of Americans are self employed. They pay themselves a wage from their business. If it is better to have a lower income in order to qualify for Mortgage Aid then they can decide to pay themselves a lower wage and invest more in their business. Many might not see anything wrong in this and I am not sure I could make a compelling argument to browbeat a plumber who decides to invest in a new van and pay himself a lower wage this year in order to get some help on the mortgage.

The real hazard is that those that need help will be pushed aside by savvier homeowners that can play the system and make their cases look “better” and have the resources and the knowhow to get the mortgage aid they want.

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Are Loan Modifications Worth your time

July 16th, 2009 No comments

Are Loan Modifications Worth the Hassle?

Loan modifications can help you or can sink you. They can give you a break and allow you to afford your monthly payments or even pay off your mortgage sooner or with a lower interest. Unfortunately they can be the worst financial mistake you ever made. This has caused many to ask themselves if weighed in the balance of common sense are loan modifications worth the time and hassle.

The quick answer is quite predictably, it depends.

It depends why you want the loan modification and what kind of loan modification you need.

There are two main reasons for loan modification we will analyze in this article, financial duress and trying to get a better deal.

Loan modifications for those in financial difficulties.

In the last year the number of mortgage foreclosures due to financial duress has reached the estimated number of 4.5 million. These homeowners cannot meet there monthly commitments and are defaulting on their home mortgages. Loan modifications for them are a must if they want to keep their home. The governments worldwide, and the U.S are no exception, are doing a lot to supply ways out for those that cannot afford their mortgages. In these cases loan modifications are very often worth it. What can you do to save your home with a loan modification?

However let’s start with a fact that many ignore, loan modifications don’t have to cost you anything. In their most basic form they are an agreement between you and your bank’s loss mitigation sector. As we have repeatedly said in our articles foreclosures are a lose-lose situation, the client loses, the bank loses and the economy as a whole suffers. This means that banks will work with you, up to a point, to modify your mortgage if you are undergoing financial hardship.

A loan modification could increase the time you have to pay back your mortgage, reducing the monthly payments but increasing the overall cost of the loan or mortgage. A loan modification could also consolidate a number of debts into one large loan which could also reduce the monthly expenses of a family.

Loan modifications for those in search of a better deal.

The current drop in interest rates has caused many to wish their interest rate was as low as the current going rate. It’s like when you buy yourself a new car and find out 2 weeks later they dropped the price by $5,000 you obviously wish you had waited but nobody is going to buy it off you now and resell at a lower price.

Happily some banks are willing to do that with your mortgage. This can produce great savings on homeowners that can reduce their mortgage’s interest rate. There is the danger of hidden costs and increased debt.

Many loan modifications can look great and shiny from a distance but hide closing fees and other nasty surprises. Before you sign anything ask for a detailed summary of costs and savings and make sure what closing fees your current lender demands and what expenses your new lender is willing to cover.
If in doubt contact a qualified financial adviser that can help you make sure there are no surprises in your loan modification.

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Home Loan Refinancing Anti-Foreclosure Effort Results Disclosed

July 7th, 2009 Comments off

Home Loan Refinancing Anti-Foreclosure Effort Results Disclosed

A lot has been said of the efforts of the Obama administration to curve the drop in the credit and real estate sector. You can love it or hate it but you can’t argue that an effort is being made. Our previous blogs discussed the changes in the eligibility requirements to include more borrowers but have they been enough?

What are the results of this broad effort to alleviate those hit the hardest by the crises and that are in risk of losing their homes?
The quick answer is that we don’t really know. The White House guesstimates that “over 50,000” at risk loans have been refinanced so that homeowners can keep their homes. The exact number is not available because a tracking system for refinanced mortgages is still to be set up.

This has not stopped the Treasury from “predicting” that 20,000 bad loans will be “saved” ever y week by September. That sounds great and will be a great help for many families. However if analysts’ predictions are correct seven million homes will foreclose this year and next year. Of these foreclosures 4.5 million are expected to be distress sales. If this were to really happen it would further drag the Real Estate sector, dropping prices and increasing inflation. When you are talking about 7 million foreclosures a year, 20,000 “rescues” a week (c. million a year) does not sound that great, especially when a lot of the worst cases will not be covered by the current plan.

The demand for mortgage refinancing relief has been so great that banks claim to struggle to meet demand. However there is no real incentive for Banks to go out of their way to speed up things. Current incentives measures provide up to $75 billion to banks to refinance mortgages without any penalty if loans are not modified. The mortgage modifications have focused on monthly payments reduction decreasing the monthly cost of a mortgage but making it a much more expensive product. Banks are lapping it up as these loans are also backed by Fannie and Freddie making it a win-win market for them.

These monthly payment reduction schemes sound great in principal but do not tackle the issue of home equity. As monthly payments drop the mortgage principal (amount borrowed) increases reducing further the equity (difference between the value of the home and the money owed on it). This reduces incentives to keep up to date with payments as the chance of being able to sell at a profit drop.

A potentially more useful measure would be to help reduce the principal of mortgages for borrowers in trouble to encourage monthly payments and avoiding foreclosure. If the current rise in foreclosures is not stopped it will create it’s own domino effect dragging prices down and further increasing inflation.

The effort to stop the crisis and impending doom some analysts predict this have been huge, the big question is have they or will they be enough to actually stop it from happening.

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